Bank of Kigali has been approved by the Kenya Central Bank to set up shop in the region's biggest economy.

"The Bank of Kigali, through its representative office in Kenya, seeks to explore potential business opportunities in the country with a view to evaluating the prospects for a long term presence in Kenya," the Central Bank of Kenya said in a statement last week.

Representative offices allow foreign banks to market their products and develop relationships that can be used in future when the bank decides to set up full operations.

Kenya's banking regulator noted that Bank of Kigali would benefit from the business opportunities that are expected to increase across East African Community member states, adding that the banking sector has continued to attract increasing interest from pan-African, regional and global brands.

"The entry of foreign banks into Kenya's financial sector will promote competition and diversity of financial products and services on offer," said Kenya Central Bank.

Bank of Kigali, which is listed on the Rwanda Stock Exchange, is one of the largest banks in East Africa's fastest-growing economy, in terms of assets.

In December, the bank announced its intentions to enter the Ugandan market this year in an investment move estimated at $10m (about Rwf6.3b).

"With the integration of the East African Community, our clients are constantly trading in those markets," said Bank of Kigali's chief operations officer, Lawson Naibo, last year.

Last year, Bank of Kigali raised about Rwf20b through its initial public offer and has secured credit lines worth $38.4m to finance its expansion in Rwanda and in the EAC region.